Suppose Sally Rubber Co. is going public and, based on the bookbuilding process, decides it will be issuing 300,000 shares of common stock to raise capital to fund the company's proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the Sally Rubber Co. IPO. The following table shows the number of shares requested by potential bidders. Bids Bidder 1 Bidder 2 Bidder 3 Bidder 4 Bidder 5 Bidder 6 Number of Shares Requested 50,000 100,000 150,000 200,000 250,000 300,000 Price per Share $62 $58 $51 $48 $40 $37 To sell the 300,000 shares, Sally Rubber Co.'s IPO minimum offer price should be $ The total amount of funding raised will be $ Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of $

Suppose Sally Rubber Co. is going public and, based on the bookbuilding process, decides it will be issuing 300,000 shares of common stock to raise capital to fund the company's proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the Sally Rubber Co. IPO. The following table shows the number of shares requested by potential bidders. Bids Bidder 1 Bidder 2 Bidder 3 Bidder 4 Bidder 5 Bidder 6 Number of Shares Requested 50,000 100,000 150,000 200,000 250,000 300,000 Price per Share $62 $58 $51 $48 $40 $37 To sell the 300,000 shares, Sally Rubber Co.'s IPO minimum offer price should be $ The total amount of funding raised will be $ Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) I keep getting the wrong answer, I get $2,430 and its not correct, the answer 20130 is also not correct.
Lulu Industries is in the process of selling shares in an auction IPO. At the end of the bidding period, Lulu's investment bank has received the following bids: Number of Shares Bid 50,000 25,000 25,000 100,000 125,000 Price ($) $19.50 $19.25 $19.10 $19.00 $18.75 $18.50 $18.25 $18.00 $17.75 $17.50 What will the offer price of these shares be if Lulu is selling 0.5 million shares? $18.75 $19.10 $18.50 75,000 150,000 240,000 80,000 125,000 $18.25
ABC would like to repurchase 50,000 of its ordinary shares. Investor X offered to sell his 20,000 shares at P20 per share. Investor Y offered to sell his 30,000 shares at P21 per share. Lastly, Investor Z offered to sell his 50,000 shares at P22 per share. ABC eventually paid Investors X and Y P21 per share to complete the repurchase. This is a/an *A. Fixed price tender offerB. Dutch auction self-tender repurchaseC. Open market operationD. Selective buy-back
Todd Winningham IV has $5,700 to invest. He has been looking at Gallagher Tennis Clubs Inc. common stock. Gallagher has issued a rights offering to its common stockholders. Six rights plus $64 cash will buy one new share. Gallagher's stock is selling for $82 ex- rights. a-1. How many rights could Todd buy with his $5,700? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of rights a-2. Alternatively, how many shares of stock could he buy with the same $5,700 at $82 per share? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of shares b. If Todd invests his $5.700 in Gallagher rights and the price of Gallagher stock rises to $90 per share ex-rights, what would his dollar profit on the rights be? (First compute profit per right.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Dollar profit
Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) I keep getting the wrong answer, I get $2,430 and its not correct, the answer 20130 is also not correct, and the answer 20459.29 is also not correct
(answer the next 3 questions with the following information.) A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco. The terms specify that EBV invests $5 million for 5M shares into Newco, which currently has 10M shares allotted to employees and founders. Security structure is as follows: First pay [one] times the Original Purchase Price on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock pro rata on an as-converted basis. The liquidation return is capped at four times OPP. EBV has committed capital of $100M with 2% management fee. GP% is 10%. If the exit value is $72, how much is the distribution to the VC? O $32M O $27.3 O $24M O $10.7M
You would like to buy shares of Sirius Satellite Radio (SIRI) The current ask and bid quotes are $3.96 and $3.93 respectivety You place a market buy-order for 500 shares that executes at these quoted prices How much money did it cost to buy these shares?
Consider the following table, which is the ECN book for Intertech Company's stock. Entry Number Bid or Ask? Bid Bid Bid Bid Ask Ask Ask Ask 5 ECN Book for Intertech Company Shares 1,000 400 6 7 1 2 3 4 5 8 6 7 8 700 Suppose a new limit order is placed to purchase as many shares as possible at a price of no more than $40.42. A total of be purchased. 300 400 200 100 Which entries will be removed from the ECN after the transaction is complete? Check all that apply. 900 Price $40.06 $40.13 $40.22 $40.31 $40.42 $40.53 $40.63 $40.75 shares will
You would like to sell 220 shares of Echo Global Logistics, Inc. (ECHO). The current ask and bid quotes are $15.44 and $15.39, respectively. You place a limit sell order at $15.43.If the trade executes, how much money do you receive from the buyer?
Roundtree Software is going public using an auction IPO. The firm has received the following bids: Number of Shares 120,000 200,000 560,000 1,200,000 1,240,000 800,000 400,000 Price $14.60 14.40 14.20 14.00 13.80 13.60 13.40 Assuming Roundtree would like to sell 2.08 million shares in its IPO, what will the winning auction offer price be? The price will be $ per share. (Round to two decimal places.)

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS